Africa's public debt amid global headwinds: balancing resilience and vulnerabilities

Michael Chui and Leonardo Gambacorta

No 132, BIS Bulletins from Bank for International Settlements

Abstract: The conflict in the Middle East has raised energy and fertiliser prices, weakened growth and intensified fiscal pressures across Africa at a time when public debt and debt service burdens remain elevated. The shift towards domestic currency debt has reduced exchange rate risk for issuers and preserved market access, but higher interest rates and shorter maturities have increased debt service costs and rollover risks. A heavy reliance on banks and central banks for government financing can reinforce the sovereign-bank nexus, crowd out private credit and threaten financial stability. Developing deeper markets and a more diversified investor base are essential to address these challenges.

Pages: 8 pages
Date: 2026-08-11
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